Stocks Slump as Crude Struggles to Hold $58

NEW YORK (TheStreet) -- Stocks slumped on Tuesday as crude oil struggled to hold onto a level above $58 a barrel.

A stronger U.S. dollar hit commodities which were viewed as more expensive to international markets. West Texas Intermediate crude closed 2.8% lower to $58.03 a barrel. Shares of Exxon Mobil (XOM), BP (BP), Royal Dutch Shell (RDS.A) and Chevron (CVX) all were lower.

Equities were under pressure after signs of economic recovery exacerbated fears the Federal Reserve would hike rates sooner than expected. Data placed an emphasis on Fed Chair Janet Yellen's comments from Friday that a hike would come when the economy improved as expected. Click here for more.

The S&P 500 was down 1.2%, the Dow Jones Industrial Average fell 216 points or 1.2%, and the Nasdaq dropped 1.3%. The Volatility Index (VIX.X), or 'fear' index, jumped 20.5% to 14.61.

The U.S. dollar gained against a basket of international currencies on better-than-expected data on home prices and consumer confidence. The greenback has surged this year since it's viewed as a safe-haven asset as the Fed looks to tighten policy while the European Central Bank introduces stimulus.

"When you take a look at the data, it was supportive of Yellen's comments Friday -- certainly more supportive of raising rates than not," Paul Nolte, portfolio manager at Kingsview Asset Management, told CNBC.

New-home sales bounced back in April, climbing 6.8% to an annual rate of 517,000 after a poor performance in March due to winter weather. Economists had expected sales of 490,000.